News:
August 3, 2026
Finance Minister Cassiel Ato Forson has laid before Parliament the Energy Sector Levies Amendment Bill, 2026, seeking to close a tax evasion scheme that has cost the state an estimated $25 million in revenue over the past six months.
Presenting the motion in Parliament, Mr. Forson revealed that unscrupulous individuals in the downstream petroleum industry have been misclassifying diesel as fuel oil to exploit a significant tax differential.
“Mr. Speaker, there has been a potential revenue loss of about $25 million in the last six months from January to June this year, and this stems from the fact that diesel has been misclassified as fuel oil by certain individuals,” the Minister stated.
He explained that while diesel and fuel oil are nearly identical products, their tax treatments are vastly different. Diesel attracts a tax of 35 pesewas per litre, whereas fuel oil is taxed at just 25 pesewas per litre, creating a differential of 10 pesewas that has fuelled widespread arbitrage.
Surge in Fuel Oil Volumes
The Minister presented startling figures to the House, noting that historical data shows Ghana should consume an average of 5 million litres of fuel oil per month. However, between January and June 2026, fuel oil volumes surged to over 20 million litres monthly—a staggering 493% increase year-on-year.
“The incentive is because there is clearly a huge tax arbitrage,” Mr. Forson said. “Some individuals are taking advantage and smuggling, buying diesel and disguising it as fuel oil and collecting the taxes on it.”
Ex-Post Refund System to Replace Ex-Ante Exemptions
To address the leakage, the government is proposing a shift in how tax exemptions are administered for industries that legitimately use fuel oil.
Rather than receiving exemptions upfront (ex-ante), genuine industrial users will now pay the applicable taxes and claim refunds retrospectively (ex-post). The Minister was emphatic that this does not constitute a tax increase.
“For emphasis, fuel oil is not used by motorists; it’s used by industry. There will not be a tax increase on petroleum products,” he assured.
To cushion legitimate businesses, the government is amending the Revenue Administration Act to reduce the refund processing time from 90 days to just 14 days. The Commissioner-General of the Ghana Revenue Authority (GRA) will also issue a practice note to facilitate the accelerated refund process.
Parallel to Previous Smuggling Schemes
Mr. Forson drew parallels to a similar scheme uncovered last year involving marine gas oil, which was curtailed after the government levelled taxes between diesel and marine gas oil. He warned that the current scheme has simply migrated to fuel oil.
“Those smuggling diesel and disguising it as fuel oil are behaving as mini-GRAs,” he said. “They are selling the product to you as diesel and then collecting the taxes that are due the state and keeping it to themselves.”
Billions at Stake Annually
The Minister cautioned that without intervention, the state could lose in excess of 1 billion Ghana cedis annually to this smuggling activity.
“Mr. Speaker, this approach will stop it,” he concluded. “Largely, this is a compliance measure to stem the leakage.”
Ghanamps.com